By Rob Arkwright, Hargreave Hale & Co THE London Stock Exchange pulled the plug this week over its plans to merge with Deutsche Borse.

This was following conflicting differences between opposing directors over how the iX market would be run.

With these problems not being resolved in time, the LSE decided to back out, and concentrate its efforts on fighting a hostile bid from Sweden's OM Gruppen.

On the markets, there has been a decline in stocks, following continued concerns that rising oil prices would slow down the global economy and cut into company profits.

However, oil stocks, which have been rising of late, saw various amounts of profit taking, following the Saudis reiterating their intentions to get oil prices back to $25 a barrel.

One of the few sectors to benefit this week has been the pharmaceutical sector, which was encouraged by the pound's fall to a 14-year low against the dollar.

This helped boost companies with large dollar earnings, such as drug stocks. Glaxo Wellcome and SmithKline Beecham, which have seen a recent setback after a further delay for their merger to be completed, saw investors dive back in.

Also, AstraZeneca formally launched Nexium, the successor to its phenomenally successful anti-ulcer drug, Losec, and reported initial sales of £1.25 million.

The stock was also helped by positive data on Iressa, its cancer treatment, from a conference on lung cancer in Tokyo. All three pharmaceutical giants saw good initial rises in their share prices, but have retreated slightly since.

Among the retail sector, Kingfisher, stunned the city by announcing plans to demerge, in an attempt to regain the confidence of investors.

Superdrug and Big W is to join up with the Woolworths chain in one company, with the B&Q DIY chain and Comet, the electrical retailer, demerged into a quoted retail group. It is hoped that the break-up could encourage a bidder for one or both parts, which helped boost the share price.

Finally, Marks & Spencer saw a rise this week, following rumours that Terry Green, the Debenhams chief executive, may be considering a fresh bid attempt.